ECB’s Centeno: Euro Area to Continue Growing Rapidly; Policies Must Support Recovery

11 October 2021

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mario Centeno on Monday predicted continued rapid euro area economic growth while warning of risks.

In a speech at an online financial stability conference, Centeno, who heads the Bank of Portugal, reiterated much of what he had said in another speech two weeks earlier.

After a better-than-expected 2Q, the euro area would ‘continue to grow rapidly, exceeding its pre-crisis level in the fourth quarter of 2021’, he said. ‘Moreover, the trajectory projected before the pandemic is expected to be reached by the end of 2023.’

There would be ‘no permanent economic loss from the crisis, even if with a different productive composition’, he said, as long as ‘forthcoming policy decisions’ were designed to ‘aim at supporting a sustainable and durable economic recovery of all sectors, while continuing to contribute to the mitigation of risks and vulnerabilities created by the pandemic shock.’

‘A positive outlook does not mean that we are out of the woods, not yet’, he said. ‘Several risks still loom. The possibility of new pandemic waves and longer supply bottlenecks are among these risks.’

The recovery was being driven by household spending, ‘supported by a rebound in real disposable income, favourable financing conditions, high confidence and a relatively faster reduction of excess savings’, he said. ‘Investment and public consumption are also providing a positive contribution, although more modest.’

Centeno paid homage to the banking sector’s resilience.